XTI/USD: WTI Crude Oil

West Texas Intermediate is the American benchmark, and its futures contract ends in real barrels delivered into pipelines and tanks at Cushing, a small town in Oklahoma. That one inland delivery point is what makes WTI itself: its price depends on how full the tanks at Cushing are and on whether oil can get out. It is the market with the most frequent and most detailed official data.

General education about the underlying market. It states no current price or rate, makes no forecast and is not advice. What GIO4X offers on this instrument is in the trading conditions on this page, not here.

Physical oil

Owning crude means owning something that must sit in a tank or move through a pipe, at a cost. That cost of storage is what links one month’s price to the next, and it is why the curve matters to anyone holding an oil exposure for more than a few weeks.

A futures contract

A WTI future is a commitment to deliver or receive oil at Cushing in a named month, though nearly all contracts are closed before that. Its price converges on the price of physical oil at Cushing as expiry nears. A holder who wants to stay exposed sells it and buys a later month.

A fund that holds futures

Funds offering exposure to oil hold futures, not oil, and roll them on a schedule. Their returns have differed widely from the change in the headline price over the same period, because of the curve. In the spring of 2020 several such funds changed which months they held at short notice.

A CFD

A CFD on WTI exchanges the change in a provider’s price, which is derived from the futures. It involves no delivery. It still inherits expiry and the curve, either through a contract that expires and is replaced or through an adjustment when the reference month changes, and it adds the provider as counterparty.

Expiry

Each monthly contract stops trading a few business days before the twenty-fifth of the month before delivery. In the final days the number of open contracts shrinks quickly, trading thins, and the price is set by the few participants who can handle physical oil.

The day the price went below zero

On 20 April 2020, the day before the May contract expired, that contract settled at minus 37.63 dollars a barrel. Demand had collapsed in the pandemic, storage at Cushing was close to full, and holders who could not take delivery had to pay others to take the contracts from them. The exchange had confirmed some days earlier that its systems would accept negative prices; later months stayed positive throughout.

Contango, backwardation and the roll

In contango, later months cost more than nearer ones, and a position rolled forward buys dearer than it sells. In backwardation the reverse is true. Over a year of steep contango a rolled position can lose substantially while the front-month price ends where it began, and the weeks around April 2020 were the extreme case.

Exchange limits and margin changes

The exchange applies price-fluctuation limits that pause trading briefly after a large move, and it raises the margin required on futures when volatility rises. Both have knock-on effects for products priced from the futures.

These describe how such events work in general. How GIO4X treats them on its own contract (adjustments, rollover dates, suspensions) is a trading condition and is not yet published.